Estate Planning and Tax Lawyer Blog

Teaching your children and grandchildren about money is one of the greatest gifts you can give.

And that instruction should go well beyond simply telling them that “money doesn’t grow on trees."

An article in the Wall Street Journal provides some good guidelines with The 15 Money Rules Kids Should Learn:

1. Spending money happens only after you earn it.
2. When kids start asking parents to drive to the toy store to buy some plastic whatnot, it’s time to consider an allowance.
3. The size of an allowance shouldn’t be so meager that your child is a pauper among peers, nor so generous that your child can easily afford all wants with little financial planning.
4. Good grades are expected and help around the house is simply the price of family life.
5. While 16 is generally the legal age of employment, encourage kids starting around age 13 to think of ways they can earn an income.
6. Guide and advise your kids about money, but don’t dictate.
7. Failure to balance the debit-card bank account monthly means losing access to the debit card for a week or more; failure to repay an entire month’s credit card balance means the loss of the card until the balance is fully paid off, plus one additional month.
8. Only 50% of the money put into a piggybank can be taken out to buy something.  At least half must remain inside the pig.
9. Children should have the right to screw up financially so they can learn from their mistakes.
10. When it comes to investing in stocks, kids should understand a company at such a basic level that they can draw a picture of the business model with a crayon.
11. You don’t need to be wealthy to begin teaching your children about the stock market.
12. If a child’s charitable interests lie outside your special interests, so be it.
13. Parents don’t have to save every last dime a child will need for college expenses.  You only have to save up to your ability or desire to pay.
14. One of the greatest gifts you can give your child is your own financial self-sufficiency when you’re old.
15. At some point, you have to tell your kids that the Bank of Mom & Dad is officially closed.

I have started using some of the above tips at home with my 10 year old.  He has an envelope that he keeps in his room which he puts his allowance into and any gifted money into and several times a year he will count it to see if he has saved enough money to buy something that he really wants.  Its a small step to take in teaching him responsibility. Afterall, before I know it he will be in college and then it will be too late to teach him.

Need to learn some of these lessons yourself?